Residential Aged Care costs in Australia are now assessed using a formula based on your income and your assessable assets, that can include the value of your home.
Instead of selling your home, you can unlock your home equity through an aged care loan to finance your Aged Care costs.
Barry and Annette had been living in their home for 48 years when Barry was assessed as needing to enter Residential Aged Care. They also had a holiday home valued at $550,000. They needed to pay room accommodation of $450,000 – money that they did not have. Barry was adamant that the holiday home should remain for their family’s use, so selling the home was not an option. Paul arranged an Aged Care loan to meet the Accommodation cost and both the family home and holiday home remained.
For Barry and Annette
They have the funds for Barry to make the move to Aged Care.
They are able to pay quickly, saving substantial interest charges to the aged care facility.
They have peace of mind, knowing that they did not need to sell either property.They have the choice to pay an accommodation payment in part (or full) via a periodic payment to the aged care facility. Both are now regarded as two single people, “couples separated by illness”. This, and some debt against the holiday home, will see an increased pension for both.
They will continue to own their home and holiday home.
The loan is only due for payment when the second partner leaves the home, and can be refinanced or paid from the sale of the house.
Should Annette move from their home to aged care, a further aged care loan can be provided.
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